November 16, 2023

Financial Results Briefing Session for the Six Months
Ended September 30, 2023
Q&A (Summary)(Q1) It seems that the downward trend in sales volume has not stopped. Please tell
us about the outlook for the future and the measures you are taking to overcome
the situation.
(A1) The full-year forecast for production and sales volume is affected primarily by adecrease in stainless steel demand due to inflation resulting from the energy crisis andthe economic slump, as well as a decline in sales prices due to the subsequent
competition with nickel pig iron (NPI).
We intend to ascertain the changes in the business environment accurately andcontinue to optimize our production and sales structure according to the situation, witha view to increasing production.

(Q2) It seems that some companies are using recycled raw materials. Please tell us
about your company's future initiatives for the decarbonization of ferronickelsmelting.
(A2) In addition to our conventional energy-saving initiatives, we are working to shift to raw
materials and fuels with lower greenhouse gas emissions and to investigate theintroduction of new technologies. In particular, among such new technologies, we areinvestigating an electrification process utilizing microwaves to significantly reduce theamount of coal used in the nickel ore calcination process. We have confirmed theanticipated response in the laboratory level test, which has led to our decision to moveon to a larger scale test.

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(Q3) I believe that prices of general coal and electricity have hit their peaks. Pleasetell us how energy and other cost levels will change from the first half of thefiscal year to the second half of the fiscal year.
(A3) Especially in the recent two years, the resource and energy environment has changed
dramatically. Russia's invasion of Ukraine has exacerbated this energy crisis andcaused unprecedented price hikes. Being a heavy power consuming industry, we aresignificantly affected.
Energy resource prices weigh more than twice as heavily on costs as in normal times,
making cost reductions extremely difficult.
For the second half of the fiscal year, the trend has been relatively calm, and we haveapplied a price range based on the current levels in our financial results forecast.

(Q4) Please tell us about your measures to increase earnings to improve financialresults.
(A4) We have reduced production to reduce losses, but we recognize that this is a relatively
short-term measure.
We produce ferronickel in compliance with strict environmental standards.
Furthermore, since last year, we have been promoting the use of microwaves to reduce
the use of fossil fuels in the calcination process and have been conducting researchand development on this. By proposing carbon-neutral green products to ourcustomers, we aim to recover and expand demand and increase earnings.
In addition to these initiatives, we are strongly promoting the development of overseas
business, the creation of new businesses, and the restructuring of the recycling
business as prioritized measures in the medium-term business plan. We will build astable earnings base by developing businesses that are less susceptible to the market
conditions.

(Q5) Please tell us about the impact of exchange rate fluctuations on your earnings.
(A5) I will refrain from explaining the amount of the impact since it is a matter of sensitivity.
However, in principle, it will have a positive impact as we procure raw fuel overseas,produce ferronickel, and sell it in dollars.

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(Q6) Please tell us about the likelihood of incurring new impairment losses in thefuture, as well as your measures for a recovery in your financial results and forcost reductions.
(A6) As for the likelihood of incurring impairment losses, the Company will consider thevaluation of fixed assets in accordance with accounting standards when operating
losses continue.
As for cost reductions, we are working on all possible measures to reduce production
costs, including the reduction of procurement costs of raw materials and goods,
logistics cost, electricity costs, production intensity, capital investment, fixed cost,energy savings, and the procurement of recycled nickel resources.

(Q7) When will the financial results bottom out? What are the grounds for yourprediction?
(A7) With regard to our ferronickel production costs, we expect it to be improved on theground of inventory turnover and normalization of electricity prices since the one-timespike in energy prices has subsided, even though there will be a time lag before energy
price stability is reflected in electricity prices. As for your question about the timing, I
ask that you forgive me for not answering as multiple factors are involved.

(Q8) I know LIB recycling is a business that other companies have expressed interestin entering. What are the features and capabilities of LIB recycling planned byEmulsion Flow Technologies Ltd.?
(A8) The LIB recycling business concept that Emulsion Flow Technologies is pursuing
involves a major recycling company that can provide as a partner a stable supply of
black mass, which is the raw material. The technological capabilities lies in the use ofemulsion flow technology in the process of separating and refining rare metals fromblack mass.
This emulsion flow technology is more than ten times more efficient in production thanconventional technologies, bringing the advantage of downsizing facilities as well as
reducing running costs.

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(Q9) As for the new metal smelting project, how much benefit and positive impact doyou expect from outsourcing smelting?
(A9) We have concluded a memorandum of understanding with The Metals Company, andwe are currently considering the utilization of the facilities at the Hachinohe Works andthe smelting technology we have developed through various ferro-alloy manufacturingbusinesses since our foundation. We cannot provide details at this point, but we willcontinue to promote the project in a way that will surely benefit us.

(Q10) You have greatly reduced the sales volume in this period, but the impact is not
so evident in terms of the sales volume in the consolidated ordinary profit andloss analysis for the financial results for the six months ended September 30,2023. I suspect that the reduced volume resulted in a loss.
(A10) The table of analysis for the financial results for the six months ended September 30,
2023 is based on the profit and loss for the previous period, and the profit and loss up
to the current period are compared by factor to show the trends. Since the environmentchanges on a daily basis, the level of unit sales prices and unit purchase prices for theprevious period and the current period are not the same. For example, a comparisonof the unit sales prices for the previous and current periods shows that the unit sales
price for the previous period is slightly higher. Since the sales volume in the current
period is small, the range of the decrease in earnings would be larger if the previous
period is used as the basis. As for the volume control policy in the current period, wehave decided to reduce it because, at the unit price level of the current period, reducing
the sales volume works better in terms of earnings compared to increasing the sales
volume.

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(Q11) Please tell us about the recent market trend of nickel (Class 1 and Class 2) in astraightforward way, especially the situation in China, where panic selling has
not occurred.
(A11) The products that are currently experiencing large production and sales increases in
the Class 1 nickel market are nickel sulfate and nickel metal for use as raw materials
for electric vehicle batteries. The production and sales of these products are increasing
year by year, mainly in China. In addition, Indonesia, a major producer of Class 2 nickel
NPI, is accelerating the conversion of NPI to nickel matt, the raw material for Class 1nickel. Although demand is currently weakening in China, where the economy is on adownward trend, preparations are steadily underway to meet the demand for the shift
to electric vehicles, which is expected to accelerate worldwide in the future.
On the other hand, demand for Class 2 nickel, as represented by NPI and FeNi, iscurrently weakening in China, which is a major producer of stainless steel. However,
we expect to see a certain degree of tightening of supply and demand for Class 2 nickel
due to the expansion of the use of such nickel in electric vehicles and an increase indemand following the expected recovery of the Chinese economy.

(Q12) How do you view the capital costs? How do you consider the efficiency of theprioritized measures?
(A12) Our target financial indicators are highly sensitive to external factors that areparticularly unpredictable such as commodity markets, currency exchange rates, andresource nationalism due to the nature of our business. In addition, new businesses
that utilize or apply smelting technologies require relatively long-term discussions,depending on the scale of the investment. Therefore, we have not set any target
figures, etc., but we consider and recognize efficiency that exceeds the capital cost to
be one of targets we need to pursue. Information on the latest business environment
and financial results, and prioritized measures will be shown at financial results briefing
sessions, etc.

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(Q13) How much is the difference between the NPI nickel price and the LME nickel
price? What do you expect the difference to be in the future?
(A13) Even though there is a time lag, the NPI price is generally linked to rises and falls in
the LME price, stainless steel market conditions, the supply of and demand forstainless steel raw materials, and exchange rates. However, the NPI price is not asvolatile as the LME price. The NPI price has been stable at around $17,000 for thepast few years, but there was a time when the price difference between NPI and LME
was as large as $8,000 to $10,000 due to the volatility in the LME price.
Currently, the LME price is on a downward trend, while the NPI price is on an upward
trend, resulting in a narrowing of the price difference to the $4,000 level. Although thecurrent demand situation is difficult, we believe that NPI will gain momentum as a raw
material for electric vehicles and demand will expand in the future. The price difference
will depend on the LME price, but we do not expect to see a large difference.

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